Digital Banking Startup Abruptly Shuts Down Services for Founders in Restricted Countries

Digital banking solutions provider Mercury made headlines earlier this year due to regulatory scrutiny over its account opening practices. Now, the company has updated its eligibility criteria, discontinuing support for founders located in specific countries and regions.

Mercury confirmed it recently informed some customers that they could no longer receive services due to address locations or patterns of account activity tied to restricted areas. While sanctions broadly target nations like North Korea, Iran and Russia, Ukraine has also been added despite once fostering a vibrant startup scene.

Founders with Ukrainian passports residing in the U.S. remain supported. However, the policy change was initially miscommunicated, incorrectly implying a general Ukrainian passport ban which was later revised. Affected Ukrainian founder Alyona Mysko expressed concern this represents challenges for the country’s entrepreneurs that extend beyond any single company.

Support was also ceased for founders based in Nigeria and Croatia, two countries appearing on a financial risk monitor list. Two unidentified Nigerian startup founders living in America reported similarly losing their accounts within 30 days, despite their U.S. operations. Last year, Mercury also limited some African accounts.

Mercury explained the Ukraine decision by asserting that diversifying compliance standards for its sanctioned regions has grown overly difficult. While not comprehensively blacklisted, parts of Ukraine face restrictions, requiring detailed policy that has become increasingly complex to uphold. The company promises to reassess this determination in the future.

For founders suddenly cut off from vital banking infrastructure, the news underscores the need for reliable partners committed to their long-term success. Competitors like Brex and Raenest are assisting affected customers through this transition. Overall, the situation highlights the precarious nature of early-stage operations and dependence on stable backing solutions in today’s challenging global economic environment.